As you may have heard, Kootenai Electric Cooperative's (KEC) rates are increasing by 7.75% with the January 2026 billings. I feel it is important to explain the factors that contribute to this. They are complicated, very difficult to control and reflect a foreshadowing of issues I have been communicating to the membership over the past year.
KEC operates on a not-for-profit basis and is owned and operated by those it serves. Because of this, KEC is able to purchase power from the federal hydro projects that operate within the Columbia River Basin. This power is among the least expensive in the nation and provides for 70% of our members’ needs. However, the federal dams are at capacity and unable to provide more power than they currently generate. They are also aging assets that increasingly require capital reinvestment and maintenance to keep viable, which in turn increases the cost of the power they produce. This past year, those costs increased by $979,000, or 9.8%. This factor results in an increase in retail rates we charge our members of approximately 1.2%, given that power supply costs represent nearly 38% of KEC’s total operational costs.
The remainder of our power needs must be met by non-federal resources. The cost of purchasing this power, which represents 30% of our total power requirements, also continues to increase. This past year, those costs increased by $1,082,000, or 14%, and resulted in retail rate pressure of an additional 1.4%.
Alongside generation costs, we must also consider how power is delivered from the point of generation to our electrical system. This is done through high-voltage transmission lines owned by other utilities. For KEC, this power is delivered to us across transmission lines owned by the Bonneville Power Administration and Avista. These assets are also aging and in need of reinvestment and maintenance. Collectively, the cost of “wheeling” power across the transmission system to KEC represents about 5% of our total operational costs. Largely due to the capital improvements required, these costs increased by $1,017,000, or 19%, this past year, producing retail rate pressure on KEC of 1.3%.
The incremental cost of purchasing, producing and delivering the power our members use resulted in rate pressure of $3,078,000, or 3.9%, that must be recovered through our rates and accounts for 50.5% of the total increase in rates effective with January billings. The balance of this increase, $3,020,000, or 3.8%, is driven by all other factors. Those factors are more within the control of KEC, notwithstanding certain market and commodity-related costs driven by interest rates and supply chain shortages. These costs are primarily driven by KEC’s ongoing investment and maintenance of its own distribution system. Most notably, during 2026, KEC will invest a record amount in its electrical infrastructure which is necessary to replace aging assets, upgrade lines and substations needed to address load growth and clear vegetation from our rights-of-way to ensure electrical reliability and mitigate wildfire risk.
I would like to close by highlighting a few key points for your consideration and awareness: First, these issues are not unique to KEC. Rather, they are factors that are increasing the rates of all utilities in the Pacific Northwest. In fact, many of our peers are facing rate increases substantially higher than those faced by KEC.
Secondly, and unfortunately, it is unlikely that these increases will be short-lived. The investments necessary in the electrical grid on which all utilities depend will create similar rate pressure for the next several years. It is anticipated that these increases will outpace the prevailing rate of inflation.
Finally, and most importantly, I want to assure you that KEC is not asleep at the wheel, nor do we take these rate pressures lightly. We are seeking alternatives to our long-term power supply requirements with the purpose of increasing our power supply diversity, lowering the overall cost of power, improving reliability and dependability and increasing the control KEC directly has over its power supply costs. These efforts are complex but important for members of the cooperative to understand. I look forward to sharing more about these encouraging developments and activities in forthcoming newsletter articles.
In closing, we recognize that increases in the cost of power are unwelcome and can be challenging for members. We want to assure you that we are working diligently to control what is within our direct and immediate control. If you are facing challenges paying your bill, there are resources available outside of KEC and we encourage members to visit our Billing & Payment Options page. or contact KEC to discuss those programs.